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Senate votes to cut insurance subsidies to rich farmers

WASHINGTON (Reuters) - The wealthiest 20,000 U.S. farmers should pay more for taxpayer subsidized crop insurance, the Senate voted on Thursday, adopting a measure that blended deficit reduction, populism and farm program reform.

Senators approved the amendment by a lopsided 59-33 vote, in defiance of Agriculture Committee leaders. The move would save $1.3 billion over a decade by reducing the premium subsidy for growers with more than $750,000 of adjusted gross income.

Crop insurance, which pays out if farmers' crops are damaged, is the costliest part of the farm safety net, costing $9 billion a year. It would expand by 5 percent in the Senate bill even as other farm, conservation and nutrition programs are cut by $24 billion over 10 years.

Agriculture Chairwoman Debbie Stabenow of Michigan said she expected more attempts to rein in crop insurance spending before the Senate votes on the full five-year, $500 billion bill in early June. One pending amendment would limit farmers to $50,000 a year in insurance subsidies.

The government currently picks up 62 cents of each $1 in crop insurance premiums. The subsidy would drop to 47 percent for the top 1 percent of growers under the latest amendment.

Stabenow said some farmers would find the reduction too onerous, coming on top of a requirement to practice soil conservation in order to qualify for subsidized insurance, and would drop out of the program.

Tom Coburn, the Oklahoma Republican who cosponsored the amendment, said farmers would still be getting "too much of a sweetheart deal" to drop out of the program.

The Senate approved a similar adjusted gross income limit to the 2012 farm bill that died in the House in an election-year gridlock.

Passage of the amendment marked the first time in a week of debate that senators overrode Stabenow's advice on the terms of the farm bill. The Democratic-controlled Senate earlier defeated Republican proposals to cut food stamps by $31 billion over a decade and to convert food stamps into a block grant.

Analysts say food stamps are the make-or-break issue for passage of the bill. The version pending in the House would cut food stamps by $20 billion, the largest cut in a generation. The Senate would cut food stamps by $4 billion.

Written every few years, farm bills are panoramic legislation on crop subsidies, farm exports, food aid, public nutrition, agricultural research and rural economic development. Most of the money goes to food stamps for the poor.

(Reporting by Charles Abbott; Editing by Phil Berlowitz)

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